Global domination!!

Does anyone remember the classic board game Risk? I had a good childhood friend who loved to play this game. It required a lot of patience, strategy and a good sense of timing – I could never get the hang of it. (Then Atari came along – forget about it!)

Fast forward 30 years. In the course of writing this blog, I’ve had many discussions with actuary friends. Time and time again, these same themes keep popping up: de-risking tactics take time to develop, a careful strategy must be employed and timing of your action can greatly impact the results.

I’m sure these guys would have dominated me at Risk.

In an earlier post, Helping DB Plan Sponsors Sleep at NightI discussed several ways in which DB plan sponsors can manage their risk.  Below, I’ll provide more detail on each option. You can see that patience, strategy and timing all come into play.

Side-by-side look at four de-risking options.

Side-by-side look at four de-risking options.

As I’ve mentioned in my previous posts, it’s important to remember when considering a de-risking strategy that while each option may reduce risk, they don’t reduce cost.  Risk reduction/management does not equal cost reduction.  In fact, many of these strategies come at a premium.

A careful analysis should be done for any DB plan sponsor who considers any of these options to make sure it meets their unique needs. I’d love to hear your thoughts on these options and whether or not you agree with my analysis above.

In addition to blogging here, I also tweet regularly about DB topics of interest. Click to follow me on Twitter- @scottruba.

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Affiliation Disclosures

Asset allocation/diversification does not guarantee a profit or protect against a loss. Use of DAA and/or any glide path does not guarantee improvement in plan funding status nor the timing of any improvement.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

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